Energy agencies originated over twenty years ago under the SAVE programme. As local and regional climate action goes mainstream, the role of the energy agency is changing along with public perception and support for sustainable energy. Are energy agencies coming of age?
Local and Regional Energy Agencies (LAREAs) have become a cornerstone of energy management at a regional level in Europe, providing an interface with European Union policy and a two-way channel of information on sustainable energy. Scope and remit vary from one agency to another, but their functions are myriad. These range from technical advice on energy efficiency and renewable energy, training, awareness raising, to fundraising for specific projects. Beneficiaries of their expertise include local authorities, SMEs and the general public (energy consumers).
The first of these energy agencies originated in the 1990s under SAVE, a European Commission programme aimed at promoting a ‘bottom-up’ approach to energy management. They are mainly supported by public authorities, and most are co-financed by the Intelligent Energy-Europe Programme, as well as SAVE.
According to a new report just published, Energy Agencies in Europe - Results and Perspectives , the activities of energy agencies have evolved in recent years from raising awareness on energy issues and project planning on their territory (i.e. Sustainable Energy Action Plans or SEAPs), to actively working with public authorities on project implementation.
As a result, the needs of energy agencies have moved from political support to financial support, from both public and private funds. Indeed, although they are in principle technical experts, energy agencies are becoming more and more involved with financing and with ensuring the bankability of investment projects.
Most energy agencies express a willingness to get more involved with new project financing schemes, and are interested in the Project Development Assistance initiatives (ELENA and MLEI), as well as in the development of ESCOs and Energy Performance Contracting (EPC).
Energy agencies were pioneers in raising awareness on energy efficiency and renewable energy sources. Many are still running education and training activities. Activities to promote behavioural change are important in all Member States, while there is an ongoing need for training on new energy concepts and technologies as these continue to evolve along the years.
In view of the delays which are occurring between the signing of SEAPs and their actual implementation, energy agencies are calling for more targeted training on new financial tools and services, such as energy performance contracting, and on how to mobilise public-private partnerships and ESCOs. They also call for more training on how to develop bankable project packages and how to prepare appropriate business models for local RES and energy efficiency related projects.
Speaking at a recent ManagEnergy workshop, Joan Josep Escobar, Head of Energy Management division at the Catalan Institute of Energy, made a plea for technical assistance to enable energy agencies to aggregate and bundle projects to achieve the investment volume that bankers and financiers want. ‘The distribution of funds is still too centralised,’ he said.
However, other energy agencies are successfully coming to grips with the new challenges of working with financial institutions to set up financial instruments such as revolving loans.
Bartosz Dubínski, President, Mazovia Energy Agency (Poland), explained that they took the decision to use the JESSICA instrument from the European Investment Bank to set up a dedicated holding fund with a view to the future. ‘We must be able to sustain ourselves financially. The grants will not always be there.’
The experience from Mazovia has been very encouraging for social acceptance of financial instruments and the shift away from a grants-based culture.
‘When we started, people wanted subsidies, not loans,’ said Dubínski. ‘Then project developers realised that it was cheaper to have a loan in the project than a grant, and the attitude changed. It was hard work to ignite the process, but we now have completed projects with good results and you can see the positive impact, people are catching on. Already there are ten projects in the pipeline and strong investor appetite – we’re experiencing a snowball effect.’
According to the new report, structural funds will play a growing role in supporting the development of sustainable energy activities and in bringing them into the mainstream. This is particularly relevant in the context of the European Structural and Investment Funds (ESIF) allocation to the low carbon economy – which is now running at a budget of EUR 40 billion between 2014 and 2020. Energy agencies recognise this and would like to become more involved in designing and developing policies and frameworks for using these funds for sustainable energy projects.
Some energy agencies which have a privileged relationship with their regional authorities, have already contributed effectively to the allocation of the structural funds in their regions.
Despite these successes, many energy agencies are still struggling to become recognised as an appropriate source of expertise for contributing to the selection and implementation of energy projects using structural funds.
It is hoped that the recently established Energy Managing Authorities (EMA) network will contribute to strengthening the energy agencies’ role. The network brings together representatives of national energy authorities with representatives of Cohesion Policy Managing Authorities dealing with energy. It is aimed at helping Member States make the best possible use of Cohesion Policy funding to promote energy efficiency, renewable energy and smart energy infrastructure, as well as energy-related research and innovation.
The message is clear: energy agencies must continue to evolve and grow along with the political and financial support for sustainable energy.